Big Pictures, the British paparazzi agency which has spent 20 years trading photos on celebrity gossip and scandal, has gone into administration, ending a chapter in the career of the pink-haired, Australian founder Darryn Lyons.

RSM Tenon, the accountancy firm, was appointed to sell the company's assets by the high court on 27 September and all staff have been made redundant.

Lyons, who formed the company in 2002, has returned to Australia, where he has told local press he is considering running for mayor of his home town, Geelong.

"The paparazzi business has changed so dramatically," he told the Herald Sun. "It's like the industrial revolution and smart business people have to move with the times."

He said he had resigned from the company about five months ago, but had retained his position as chairman of the board.

However, there is speculation among former staff that he is already planning a comeback, and may be behind one of the bids for the agency's valuable archive of more than 5m shots of stars, ranging from Angelina Jolie and David Beckham to Katie Price.

It is believed that a sale of the Big Pictures archive has been agreed in principle and that Getty Images was one of the bidders.

The company had been experiencing financial difficulties for some time.

Photographer Charlie Pycraft, who is owed nearly £5,000, filed a statutory demand for payment in August threatening to get a winding up order served if the bill wasn't cleared by 5 October.

Big Pictures filed its first intention to enter administration on 17 August in high court papers. Two weeks ago, staff received an email saying "the company is currently experiencing cash flow problems and therefore only essential payments for short-term ongoing trading are being made at present".

RSM Tenon would only confirm it had been appointed administrator and would not discuss the future of the agency or its staff.

However, one former employee said: "We were told last Friday that the administrators had been appointed and they said we were not going to get paid for August and we would be made redundant."

Lyons, who cuts a controversial figure in the British media world, is perhaps best known to the public for his pink mohican haircut and his fake abs, which he flashed while appearing on Channel 5's Celebrity Big Brother.

Earlier this year, he was quizzed about the ethics of his agency at the Leveson inquiry, where he said he could only "vaguely" recall paying out £58,000 damages to Hugh Grant and Liz Hurley. He said he could not remember an incident where one of his photographer's cars struck Lily Allen's, after which she sought an injunction against the company.

It also emerged this year that a secret source at Virgin Atlantic gave Big Pictures tip offs about celebrity travel arrangements, including those of Princess Beatrice.

Its website claims: "Big Pictures took the industry by storm and we are now the world's biggest celebrity picture agency with a worldwide staff of 75 representing over 1,000 photographers, supplying pictures to 40 countries.

"Our files include fantastic exclusives ranging from the first intimate pictures of Brad Pitt and Angelina Jolie, to the explosive nightclub scenes of David Beckham with Rebecca Loos."

Administrators are generally appointed by directors or secured creditors, such as a bank, who task them to realise maximum proceeds from the sale of company assets.

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